Dexter Ltd v Vlieland-Boddy
| Jurisdiction | England & Wales |
| Judge | Peter Gibson L.J. |
| Judgment Date | 24 January 2003 |
| Neutral Citation | [2003] EWCA Civ 14 |
| Docket Number | Case No: CHANF/A3/2002/1702 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 January 2003 |
[2003] EWCA Civ 14
Lord Justice Peter Gibson
Lord Justice Clarke and
Lord Justice Scott Baker
Case No: CHANF/A3/2002/1702
CHANF/A3/2002/1711
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
OF JUSTICE CHANCERY DIVISION
Lloyd J.
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr. Andrew Sutcliffe Q.C. (instructed by Messrs DLA of Manchester) for the Respondent Miss Linden Ife and Mr. John Taylor (instructed by Messrs Lester Aldridge of Bournemouth) for the Appellant
The Appellant, the First Defendant, Clive Vlieland-Boddy, and the Fourth Defendant, Edwina Harley, appeal, with the permission of Carnwath L.J., from the order made by Lloyd J. on 25 July 2002. The Appellants had applied to strike out the claims of the Claimant, Dexter Ltd. ("Dexter"), against them respectively as an abuse of process. The judge by his order dismissed those applications.
The alleged facts and claims
The facts alleged by Dexter in its pleadings in the present action commenced on 7 February 2002 are in large part disputed but must be taken to be correct for the purposes of this appeal, as they were at the hearing before the judge. I summarise them and Dexter's claims as follows.
Dexter was incorporated on 20 May 1997 with the Fifth Defendant, Wensley Haydon-Baillie, as its sole director, and Martin Vlieland-Boddy ("MVB") as its company secretary. On 30 September 1997 MVB was appointed a director of Dexter, having acted as a de facto director before then. MVB is the twin brother of the First Defendant, and they are the sons of the Fourth Defendant.
On 22 September 1997 the Co-operative Bank ("the Bank") agreed to make available to Dexter a £5 million facility and on 2 October 1997 it agreed to allow Dexter to draw down £2 million for the purchase of an aircraft engine against the submission of copy invoices evidencing the purchase. That day it was provided with a faxed copy of what purported to be an invoice from Guest Aviation Corporation ("Guest") to Dexter relating to the supply of one Rolls-Royce Olympus Concorde prototype engine and components for £2 million plus VAT. The sale was pursuant to an agreement dated 1 October 1997 between Guest, acting by Cliven Airways and Cliven Airparts (both being entities owned by the First Defendant), as seller and Dexter as buyer. The signature on behalf of Guest was purportedly that of Brad Lavoski but was forged by the First Defendant or by an employee of the Third Defendant, a firm of licensed insolvency practitioners then known as Marshalls but now known as Fortune Peat. At that time MVB was a consultant of, and the First and Second Defendants were the partners in, the Third Defendant. The invoice provided for the payment of £2 million to account no. 77161815 at National Westminster Bank plc ("NatWest").
Another document which Dexter has seen purportedly relates to a sale of the same assets. This is an unsigned agreement dated 2 October 1997 between the Fifth Defendant as seller and Guest, acting through Cliven Airways, as buyer whereby the Fifth Defendant agreed to sell the engine to Guest for £1,950,000.
The purported acquisition of the engine and components from Guest was an entirely fictitious and fraudulent scheme on the part of MVB, the First and Fifth Defendants, effected to procure the advance of £2 million from the Bank for their use and not for the benefit of Dexter. The engine is not an aero engine at all but a test rig or prototype. It is of no substantial value, nor are the components. The engine and components were acquired by the Fifth Defendant in 1986 for £600.
The £2 million was advanced by the Bank to Dexter on 3 October 1997 and paid into an account (no. 77161696) in the name of the Third Defendant at the Blandford Forum branch of NatWest pursuant to written and oral instructions from the Second Defendant to credit the same to the Third Defendant's account. The monies so credited were then paid and applied as follows:
(1) £864,104 was paid on 6 October 1997 to a bank account in Jersey of a company called Channel Hotels and Properties Ltd., apparently in repayment of a personal loan of the Fifth Defendant;
(2) £464,250 was paid on 3 October 1997 to the client account with NatWest of M Vlieland-Boddy & Co., of which MVB and his wife were partners;
(3) £60,000 was paid in cash on 9 October 1997 to the First Defendant or MVB;
(4) £261,226.14 was paid on 6 October to a client account of the Third Defendant the designation of which referred to the Fifth Defendant;
(5) £350,000 was paid on 6 October 1997 to an account of the First Defendant with Barclays Bank.
Each payment was effected by or at the direction of one or more of MVB, the First, Second and Fifth Defendants and was paid or applied otherwise than for Dexter's benefit.
Of the £464,250 paid on 3 October 1997 -
(1) £150,000 was paid to MVB;
(2) £314,250 was transferred on 6 October 1997 to an account with Lloyds Bank in the Channel Islands in the name of Portman Channel Islands Ltd. ("Portman") to be held for the account of MVB's father-in-law, Michael Hughes;
(3) on 8 October 1997 that sum was placed in a fixed bond account for 12 months in the name of Mr. Hughes;
(4) also on 8 October 1997 £315,422.88, the balance on the bond account, was transferred to another Portman account in the name of the Fourth Defendant;
(5) between 8 October 1998 and 12 July 1999 various withdrawals were made from that account, leaving a balance of £291,870.55;
(6) on 12 July 1999 that balance was transferred into another Portman account in the name of MVB.
Each payment was effected by or at the direction of one or both of MVB and the Fourth Defendant and was paid or applied otherwise than for Dexter's benefit.
It is Dexter's claim against the First Defendant that he dishonestly assisted one or both of MVB and the Fifth Defendant in the fraudulent scheme and that he is liable to account to Dexter for the £2 million as a constructive trustee on the ground of his dishonest assistance in the breaches of fiduciary duty owed to Dexter and breaches of trust committed by MVB and the Fifth Defendant. It further claims that the First Defendant received and/or benefited from part of the money fraudulently obtained by Dexter in the knowledge that such money was being paid in breach of fiduciary duty and in breach of trust, and the payments of £60,000 and £350,000 referred to in para. 7 (3) and (5) above are relied on.
It is Dexter's claim against the Fourth Defendant that she knew that the sum of £315,422.88 referred to in para. 8 (4) above was transferred to her in breach of fiduciary duty and breach of trust, alternatively that she was reckless as to whether that was the case and failed to make such enquiries as a reasonable prudent person would have made in the circumstances. It is further alleged that she assisted MVB in his breach of fiduciary duty and breach of trust and that in so doing she acted dishonestly. Dexter claims that she is liable to account to Dexter for the sum of £315,422.88 as a constructive trustee on the ground of knowing receipt and dishonest assistance.
A further or alternative claim of conspiracy is made by Dexter against the First, Fourth and Fifth Defendants and MVB.
It is Dexter's claim against the Second and Third Defendants that the First Defendant acted with the actual or apparent authority of one or both of the Second and Third Defendants and in the course of the Third Defendant's business.
Other facts
Dexter entered into administrative receivership on 23 April 1998.
On 24 August 1999 Dexter commenced proceedings ("the First Action") against MVB alone, in which many of the alleged facts set out above were pleaded. But Dexter did not allege the forgery of the signature on behalf of Guest nor the full details of what happened to the £464,250 to which I have referred in paras. 7 and 8 above. However, it did allege that the purported acquisition of the engine from Guest was pursuant to a fictitious and fraudulent scheme on the part of MVB, the Fifth Defendant and/or the First Defendant to procure the advance of £2 million from the Bank for their own use and benefit and otherwise than for the benefit of Dexter, and that that sum was fraudulently misapplied by MVB, the Fifth Defendant and/or the First Defendant. It further alleged that MVB and/or the Fifth Defendant acted fraudulently in breach of their fiduciary duties and/or in fraudulent breach of trust, and that there was a conspiracy between MVB, the Fifth Defendant and/or the First Defendant. Dexter sought to make MVB liable as constructive trustee.
The First Action came on for trial on 20 November 2000 before Evans-Lombe J. The First Defendant provided MVB with a witness statement, but did not give oral evidence because, midway through being cross-examined, MVB went to Spain and abandoned his defence. Judgment was entered against him for £2 million plus interest and indemnity costs on 11 December 2000.
On 12 December 2000 Dexter successfully applied to Evans-Lombe J. for a freezing order against the Fourth Defendant without notice. It told that judge that from information only recently obtained some of its money had been paid to the Fourth Defendant in circumstances in which she was accountable for that money. Dexter on 13 December 2000 commenced proceedings ("the Second Action") against the Fourth Defendant alone. In the Particulars of Claim Dexter repeated factual allegations similar to those in the First Action, but it also made allegations similar to those which I have set out in...
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